Epst c0 c1 t or ln epst d0 d1 t or

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: (EPS). EPSt = c0 + c1 t + . . . or ln (EPSt ) = d0 + d1 t + . . . or more complex econometrics (e.g. ARIMA). Time-series models outperform naive models. You only have quarterly observations of earnings (at best) for, typically, 10–15 years; 40 to 60 quarters of data. Equities I: R. J. Hawkins Econ 136: Financial Economics 4/ 20 Earnings and Dividend Growth About Analysts Analysts can add value: 1 2 3 4 5 Firm-specific information since last earnings report. Macroeconomic information bearing on future growth. New competitor information. Private information about the firm. Public information other than earnings. e.g. earnings retention, profit margins, asset turnover, etc. However, “[t]he evidence indicates that this superiority in forecasting is surprisingly small for long-term [3-yr or 5-yr] forecasts and that past growth plays a significant role in determining analysts forecasts.” Things to consider: 1 2 3 The amount of recent firm-specific information. The number and quality of analysts following the stock. The extent of di...
View Full Document

Ask a homework question - tutors are online